Legislature(1995 - 1996)

1996-02-09 House Journal

Full Journal pdf

1996-02-09                     House Journal                      Page 2689
HB 483                                                                       
HOUSE BILL NO. 483 by the House Rules Committee by request of                  
the Governor, entitled:                                                        
An Act relating to the calculation of unemployment insurance                  
benefits; and providing for an effective date.                                 
was read the first time and referred to the Labor & Commerce, State            
Affairs and Finance Committees.                                                

1996-02-09                     House Journal                      Page 2690
HB 483                                                                       
The following fiscal note applies:                                             
Fiscal note, Dept. of Labor/All Departments, 2/9/96                            
The Governor's transmittal letter, dated February 9, 1996, appears             
Dear Speaker Phillips:                                                         
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am     
transmitting a bill increasing unemployment insurance benefits.                
For years the unemployment insurance system has enabled Alaska                 
workers, their families, and their communities to weather periods of           
unemployment with their economic well-being and dignity intact.                
Recent events in Sitka and Wrangell, as well as in other areas of the          
state affected by plant closures or layoffs, have demonstrated all too         
well the importance of this safety net for our working men and                 
The schedule of benefits for unemployment insurance has not been               
adjusted to increase the maximum weekly benefit amount since 1990.             
Alaska currently ranks 49th in the nation in unemployment insurance            
wage replacement, with the average weekly benefit amount only                  
slightly more than 27 percent of the average weekly wage for the state.        
In terms of the maximum weekly benefit amount, Alaska ranks 35th               
in the nation, notwithstanding the higher cost of living here.                 
The current benefit schedule uses a workers yearly wage to determine           
the weekly benefit amount.  The minimum qualifying wage amount is              
$1,000, which provides a weekly unemployment insurance benefit                 
amount of $44.  For each $250 a worker earns over $1,000, two                  
dollars is added to the benefit amount.  Weekly benefits are now               
capped at $212 based on maximum wages of $22,250.                              
This bill would keep the current benefit schedule in place but would           
replace the current fixed cap with a flexible cap.  The new cap on             
wages would be 75 percent of the average annual Alaska wage, exactly           
the same as the wage base on which employers and workers are taxed             
to support the system.  Bringing the maximum qualifying wages up to            

1996-02-09                     House Journal                      Page 2691
HB 483                                                                       
the wage base would raise the maximum benefit amount from $212 to              
$238 in 1997.  The average cost to employers in the year 2000 will be          
approximately one dollar per employee per week.                                
Thirty-five states use a flexible benefits standard driven by changes in       
the average weekly wage.  The advantage of such a system is that it            
integrates the benefit standard into the self-adjusting unemployment           
trust fund formula, which is directly tied to the performance of the           
state's economy.  As average wages rise, the standard for                      
unemployment insurance benefits keeps pace in terms of income                  
replacement.  If wages fall, as they did during the 1986-1987                  
recession, the maximum weekly benefit decreases, and the employer              
tax burden decreases.                                                          
I want to emphasize that this is a modest proposal.  The bill would            
raise Alaskas wage replacement less than one percent.  While not               
enough to change our wage replacement ranging among the states, this           
small change would provide a measure of additional security to                 
Alaskas average wage earners and help slow the erosion of purchasing           
power during hard times.                                                       
As we work together to strengthen Alaska's economy to provide                  
quality jobs for Alaska's families and to move certain low-income              
people from welfare to work, we must ensure that there is an adequate          
safety net in place to allow unemployed workers sufficient finances to         
remain in their homes, in their communities, and in Alaska until they          
are reemployed.                                                                
I urge your support of this important legislation as a matter of fairness      
and equity for Alaska workers and businesses.                                  
						Tony Knowles